The Web-Connected TV Advertising space

written by: Gianluigi Cuccureddu

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Published on Sunday, 26 September 2010 20:59

The Wall Street Journal has written an article on Web-Connected TV ads. Technology companies are trying to set foot in this massive market, lead by Google, Sony and Apple, to get a piece of the billion dollar pie.

According to ZenithOptimedia, the TV ad market is:

A massive business. Last year, TV accounted for nearly 36% of the $148.3 billion U.S. advertising market.  The firm predicts the U.S. TV-ad market will grow 3.8% to $55.8 billion in 2010.

The WSJ reports that the search behemoth Google is trying to:

Sell ads that appear in search results when consumers search for what they want to watch, some of those ad executives say.
But those spots won't interrupt the ad stream that appears during a program.

I welcome Google in the TV arena, though trying their search-result monetisation on the TV screen right now is too farfetched.

* What kind of advertising should be placed next to content that consumers are requesting when it comes to watching television? Will this - unlike Google's Search Engine Advertising program Adwords, be a niche product which is relevant for only certain industries that fit the best television content?

* Depending on the kind of television content, how many viewers are in a buying mode? A ROI-focused TV ad is maybe not the goal for many advertisers who invest heavily in conventional TV advertising, but this ROI aspect, is a true power of Google's advertising. These advantages surely will be transfered to the TV screen.

Sony on the other hand:

Is considering selling video ads that play before premium programming that consumers can access through its Internet-connected TVs, Blu-ray players and PlayStation 3 video consoles, says one person familiar with the matter. The person says these ads could be available in coming months. Sony declined to comment.

Selling video ads before premium programming is a non-interruptive way of monetisation, but in terms of quality, advertisers need to research how much focus of viewers they can expect?

Tracey Scheppach, senior vice president and video-innovations director at Publicis's Starcom MediaVest Group, correctly says that:

Many advertisers remain skeptical. For one thing, it isn't clear which ad formats will work best on broadband-connected TVs.

A video format widely used on YouTube which could be seen on Google TV is the pre-roll.

Jim Louderback from Advertising Age on the pre-roll:

Here's the problem with pre-rolls: Users hate them, just as they hate pop-ups, pop-unders, those annoying Vibrant word definitions and auto-playing audio and video ads. But they are effective -- and the selectable variants are even more so: double the click-through rates of traditional pre-rolls, and nearly three times the recall.

Unfortunately, I'm afraid they also depress video sharing and snacking -- which is ultimately how a video goes viral, and how new creators build audiences. We'll soon find out whether this is true, because it appears that YouTube will put pre-rolls on many of their more popular producers as well, including the ones that benefit most from virality.

With any advertising format taken from the Web, both media and tech companies and content providers need to understand the advantages and the downsides. Powering up the TV screen with Internet connectivity doesn't perse mean its (Web) monetisation streams will work as well.

In which settings will Web-ads work on the TV screen?

The most effect can be generated in the contextual enhancement. Google is doing this on the Web with its Display Network. Something similar can be applied on the Internet behavior as well on the TV screen.

When people are surfing the Web, contextual ads that match the content an/or behavior of the user could enrich the experience without interrupting the primary objective of the user. Contextual advertising can be applied on both branding and transactional strategies.

Going beyond the ordinary

When it comes to monetisation of TV programming itself, many opportunities are yet to be grabbed by the company that understands best how to generate new revenue streams from Interactive TV.

The most recent innovative solution comes from Innovid, where we reported on this week:

The virtual items facilitated by Innovid are basically 3D objects that producers insert into videos post-production. They’re intended to look as realistic as possible so that they blend in with the real physical environment recorded by the video. And yet, they can’t go entirely unnoticed because users are encouraged to click and perform mouse gestures (or TV remote in the future?) with them to derive additional functionality (for example, to view a popup description about the particular item with links to external resources).

The most obvious use of these items would be to simply drop branded items into user generated content. If you’re looking to monetize your video, you could, for example, sign a deal with a beverage company and place their product on the table during an indoors scene. The virtual item representing the beverage could then respond to camera movements; when the camera moves around to the left, you also see the left side of the beverage appear. This is possible because the 3D object has been mapped to its calculated surroundings.

But with Innovid’s object placement, you could also make it so that users who click on the beverage see a description of it and the stores in which it’s sold. Or you could allow the user to even move the beverage to another location within the video or have it perform a special effect when clicked on. Whatever the complexity, the object becomes a more effective advertisement through its interactivity.

Another article on AppMarket explains why Product Placement in TV apps will be big.

TiVo Chief Executive Tom Rogers hits the nail by saying:

"The old models, with the amount of commercial avoidance, just aren't going to hold up."

He refers to the Cable and TV networks haven't moved fast enough to promote new formats. 

Both parties have challenges.  Cable and TV networks need to find new ways of monetisation fast, that is relevant for the new TV behavior.

In our coverage on Rovi's advertising service:

Analysts predict that Internet connected living room devices are expected to reach 540M users worldwide by 2014 and with the rapid convergence of the Internet and television, digital media advertising in the living room will become one of the fastest growing segments of the ad market.

Tech companies on the other hand need to examine current advertising and distribution models, to satisfy both the users as content providers in terms of experience and revenue.